If you’re raising a family or helping your kids to raise theirs, the biggest ticket items for the average American family have changed over the last 20 years. Buying a home and buying a car topped the charts even 10-15 years ago. More recently though, medical costs and expenses for education have grown to the point where they’re becoming contenders for the top spot in the family’s largest spending category.
A summary of the top three growing expenses for a family with near- or in-college children are:
- The Mortgage – Average monthly house payments jump 21% in fourth quarter 2013 – as measured by the minimum monthly income to qualify for a 3-bedroom home on a 30-year mortgage – Orange County California had an even bigger increase. The Realtytrac report cites the average monthly house payment across all counties in the US for a three-bedroom home bought in the fourth quarter was $865, up from $714 a year earlier – a portion of the increase is due to rising interest rates. Here’s a link to the info:http://www.housingwire.com/articles/29030-average-monthly-house-payments-jump-21-in-fourth-quarter.
Families who’ve been able to take advantage of the historically lower interest rates through refinance of existing homes have seen a drop in their mortgage expenses over the last 3 years. Not sure if you’re structured in the best possible mortgage? – send us a note and we’ll help your certainty.
- Medical Costs – For 2014, Price Waterhouse Coopers’s (PwC’s) Health Research Institute (HRI) projects a medical cost trend of 6. 5%. This is down from 11% increases seen in 1990. Consolidation of health care providers and more complex “biologics” (medicines) are driving the trend upward. The PwC report is found here: http://www.pwc.com/en_us/us/health-industries/behind-the-numbers/assets/medical-cost-trend-behind-the-numbers-2014.pdf
Families are choosing to manage the tension between a higher deductible plan and making better medical choices to lower their costs. Combined with the use of retail clinics, mobile care centers and government focus on reducing hospital re-admissions, overall costs for a number of families is reducing the more drastic potential cost increases.
- College Costs – Thanks to the trends above, the significant increase in college costs and the inflation on the other home expenses, along with the losses suffered in the market crash of 2008, the number of Americans with student loans has increase 38% in the last five years from 29 million in 2008 to 40 million according to new analysis from Experian. Here’s the CNN Money article with the details: http://finance.yahoo.com/news/40-million-americans-now-student-163200249.html.
- Coincidentally, the average cost for public tuition, fees, room & board is up 37% in the last 10 years according to College Board.org. Here’s the chart showing private college costs are also up 24% in the same period.
As a small consolation, the increase in in-state tuition and fees at public four-year institutions in 2013‑14 dropped to 2.9% after the last two years showed increases of 4.5% in 2012‑13 and 8.5% in 2011-12 and was the smallest percentage increase in over 30 years. Here’s the link to the information from collegeboard.org https://trends.collegeboard.org/college-pricing
Teske Financial™ has been helping families address overall costs and, specifically, college planning, for over 10 years. We have a proven process and have recently been certified as College Planning Relief (CPR) specialists to help minimize the out-of-pocket costs.
Whether its reducing expenses, taxes or risk, or improving and securing your retirement, Teske Financial™ has the tools to help you get organized, coordinated and financially intelligent. One click away is the “Contact Us” link to get it all started.